The Public Procurement Commission stalemate and the way forward

The issue of the appointment of the members of the constitutionally mandated Public Procurement Commission (PPC) has been the subject of intense debate among the political parties represented in the National Assembly. The Government’s side is not in favour of relinquishing Cabinet’s role in the procurement process while the Opposition political parties are adamant that once the PPC is activated, Cabinet’s involvement must cease.

As a result of the stalemate that now exists, we examine the issue and offer some suggestions as to the way forward.

Constitutional requirements

20130610watchIn 2001, the Constitution was amended to provide for the establishment of the PPC to monitor public procurement and the related procedures and to ensure that the procurement of goods and services, and the execution of works are conducted in a fair, equitable, transparent, competitive and cost effective manner. The amendment was mainly in response to persistent criticisms over the years of the failure of government ministries and departments to adhere to the Tender Board Regulations. In addition, there was public pressure to reform the Government’s tendering procedures, and many stakeholders held the view that the arrangements in place did not provide them with confidence as to the fairness and transparency in the award of government contracts. There was also no mechanism in place to address their concerns.

The PPC is required to be independent of the Executive and to report to the Legislature. It is to consist of five members with expertise and experience in procurement, legal, financial and administrative matters. The members are to be appointed by the President after they have been nominated by the Public Accounts Committee (PAC) and approved by no less than two-thirds of the elected members of the National Assembly. Appointments are for three years, renewable for one more three-year term after the end of the first term. However, for the first appointment, two members shall hold office for four years. A member can only be removed from office except as provided for in the Constitution.

The Chairperson and the Deputy Chairperson shall be elected by the Commission using such consensual mechanism as it deems fit. There is provision for the establishment of a secretariat to be headed by a Chief Executive Officer who shall serve as Secretary to the Commission.

The key responsibilities of the Commission are to:

●  Monitor and review the functioning of all public procurement systems to ensure that they are in accordance with law and such policy guidelines as may be determined by the National Assembly;

●  Safeguard the national interest in public procurement matters, having due regard to any international obligations;

●  Monitor the performance of procurement bodies with respect to adherence to regulations and efficiency in procuring goods and services and the execution of works;

●  Approve procedures for public procurement, disseminate rules and procedures and recommend modifications thereto to the public procurement entities;

●  Monitor and review all legislation, policies and measures for compliance with the objects and matters under its purview and report the need for any legislation to the National Assembly;

●  Monitor and review the procurement procedures of the ministerial, regional, and national procurement entities as well as those of project execution units; and

●  Investigate complaints from suppliers, contractors and public entities and propose remedial action.

None of the functions of the Commission can be removed or varied except by the votes of not less than two-thirds of the elected Members of the National Assembly. However, additional functions require the votes of a majority of elected Members. In addition, the Standing Committee on Constitutional Reform is required to continually review the operations of existing commissions, including the PPC, as well as the continuing need for them.

A decision of the PPC can be appealed against to the Public Procurement Commission Tribunal (PPCT) to be established by Parliament, with further recourse to the Court of Appeal.

The Procurement Act of 2003

The Act acknowledges the non-establishment of the PPC. It accordingly vests the key responsibilities of the Commission with the National Procurement and Tender Administration Board (NPTAB) until such time that the PPC is established.  In addition, Section 54(1) gives Cabinet the right to review all procurements exceeding $15 million, with the following proviso:

Cabinet and, upon its establishment, the PPC shall review annually Cabinet’s threshold for review of procurements, with the objective of increasing that threshold over time so as to promote the goal of progressively phasing out the Cabinet’s involvement and decentralizing the procurement process.

However, Section 54(6) requires Cabinet’s involvement to cease upon the establishment of the PPC, except for pending matters.

Cabinet may object to an award only if the procuring entity failed to comply with the applicable procurement procedures but it has 21 days to do so. When this happens, the matter is referred to the procurement entity for further review.

Opposition demands and the Government’s reaction

During the consideration of the proposed amendments to the AML/CFT Act of 2009, a key demand from the Alliance For Change has been the activation of the PPC as a condition for supporting the amendments after a thorough review by the National Assembly. This demand was made on the grounds that: (a) corruption facilitates money laundering; and (b) a fully functioning PPC staffed by independent and competent officials is likely to play a significant role in reducing corruption in government.

APNU did not lay down any conditionality for supporting the amendments to the Act, except that it needed more time to carry out a detailed review of the amendments. It did,          however, express concern on several occasions that the Government’s side did not submit its list of nominees for the PPC so that the PAC could select the five members.

The Government, for its part, has been silent on the issue for over eleven years, leading knowledgeable observers to conclude that Cabinet was reluctant to give up its involvement in the procurement process.  The Attorney General has confirmed this in a recent media briefing where he reportedly stated:

●  The Government must maintain “observer” status in relation to the award of contracts;

●  Cabinet has the power to accept or reject recommendations from the NPTAB;

●  When the Public Procurement Act was passed in 2003, Government had agreed to have a clause to the effect that Cabinet’s involvement would be progressively phased out;

●  The Government has now changed its mind; and

●  Since the Government is answerable for the way it uses the public purse, especially in relation to infrastructure projects, it must be given the power to approve or disapprove of contracts.

Analysis of the problem

The AFC is insisting that Cabinet’s involvement must cease once the PPC is activated, and is now joined by APNU. While this is consistent with section 54(6) of the Procurement Act, Section 54(1) provides for: (a) an upward revision of the current threshold above which Cabinet is involved; and (b) the progressive phasing out of Cabinet’s involvement to be replaced with a more decentralized arrangement. There is therefore an inconsistency between section 54(1) and 54(6).

On the other hand, the Government position of retaining Cabinet’s role in the procurement process as a permanent feature will nullify the effects of the establishment of the PPC and the constitutional provisions on the matter. In addition, the Government’s position is a signal that it is not inclined to place confidence in the work of the PPC despite: (a) the PPC’s reporting relationship with the Legislature; (b) its membership to comprise experts enjoying the full confidence of the National Assembly; (c) members’ ineligibility after serving two non-consecutive terms; and (d) right of appeal to a Tribunal and thereafter to the Court of Appeal against any decision of the PPC.

 Suggestions as to the way forward

In order to move the process forward and to break the stalemate that now exists, the following suggestions are made:

● For the procurement of goods and services, Cabinet could relinquish its role almost immediately since this is a relatively simple task for an impartial and competent PPC to oversee;

● For the execution of infrastructure works, Cabinet could be allowed to have a say in the award of contracts in excess of $100 million but under the existing arrangement whereby it can only object to an award on procedural grounds. This should, however, be a transitional arrangement and after three years, Cabinet could relinquish entirely its involvement in the procurement process to allow for the PPC to formulate a decentralized structure having regard to the existing framework involving the NPTAB, and regional, district and ministerial tender boards;

● The National Assembly should take measures to establish the Public Procurement Commission Tribunal to hear appeals against any decision of the PPC; and

● If after three years of its existence, there is any unhappiness with the way the PPC is functioning, a request can be made for the Standing Committee on Constitutional Reform to review its operations; and

● Once the members of the PPC are appointed, its secretariat should be set up and staffed with competent officers, including a Chief Executive Officer serving as the Commission’s Secretary.

If the Government and the combined Opposition can agree on these measures in the spirit of compromise, there will be no need to amend the Procurement Act. Above all, there is victory for everyone, and the public interest will be best served.

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